Level I CFA: Quant The Time Value of Money-Lecture 4

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  • Опубликовано: 7 сен 2024

Комментарии • 56

  • @IFT-CFA
    @IFT-CFA  3 года назад

    Want to read FREE NOTES for the Level I exam? You can find it here: ift.world/notes/

  • @vinaypalsinghchandel4769
    @vinaypalsinghchandel4769 4 года назад +18

    For anyone looking on how to key in negative FV or PV in Calculator, just press 'Reset' button after keying in the PV or FV to make it negative. You are welcome.

  • @kaustavroy72
    @kaustavroy72 4 года назад +2

    @IFT: Referring to Q.3 from Section 7.1 - You invest $900 today and receive a $100 coupon payment at the end of every year for 5 years..... - Want to understand the concept behind this calculation. Even using calculator, it is applying some formulae & evaluating. So, how is this problem manually solved using the formulae & how to represent it using formulae?

    • @IFT-CFA
      @IFT-CFA  4 года назад +2

      Given a present value, a series of equal values that occur after equal intervals in future and/or a single value at some future date that are subject to compound interest, the interest rate can be worked out using either of the following equations:
      PV = PMT ×
      1 − (1 + RATE)-NPER
      +
      FV
      RATE
      (1 + RATE)NPER
      FV = PV × (1 + RATE) + PMT ×
      (1 + RATE)NPER − 1
      RATE
      Where,
      PV is the present value i.e. a single sum at t=0,
      FV is the future value i.e. a single sum at t=NPER,
      PMT is the periodic equal cash flow that occurs after equal interval,
      NPER is the total number of periods between PV and FV, and
      RATE is the periodic compound interest rate.
      The above equations look over-whelming even though they are just different forms of one relationship. We can only solve them using the hit-and-trial method. We plug different values and keep notching it up and down till we get a value that best fits the equations. Instead of going through the hassle, we can use the calculator.
      IFT Support Team

  • @rawanromieh3534
    @rawanromieh3534 3 года назад +1

    you saved my life , God bless you

    • @IFT-CFA
      @IFT-CFA  3 года назад

      Thanks for your kind words.
      IFT Support Team

  • @yukshingfong
    @yukshingfong 3 года назад +2

    May I have the formula of 7.1 Question 3? Thank you

  • @kaustavroy72
    @kaustavroy72 4 года назад +2

    @IFT: Referring to Section 7.3: Size of Annuity Payments - Which formula is being used to manually solve for the problem?

    • @IFT-CFA
      @IFT-CFA  4 года назад

      Given a present value, a series of equal values that occur after equal intervals in future and/or a single value at some future date that are subject to compound interest, the interest rate can be worked out using either of the following equations:
      PV = PMT ×
      1 − (1 + RATE)-NPER
      +
      FV
      RATE
      (1 + RATE)NPER
      FV = PV × (1 + RATE) + PMT ×
      (1 + RATE)NPER − 1
      RATE
      Where,
      PV is the present value i.e. a single sum at t=0,
      FV is the future value i.e. a single sum at t=NPER,
      PMT is the periodic equal cash flow that occurs after equal interval,
      NPER is the total number of periods between PV and FV, and
      RATE is the periodic compound interest rate.
      The above equations look over-whelming even though they are just different forms of one relationship . We can only solve them using the hit-and-trial method. We plug different values and keep notching it up and down till we get a value that best fits the equations. Instead of going through the hassle, we can use the calculator.
      IFT Support Team

  • @aayushwadhwa3788
    @aayushwadhwa3788 3 года назад +2

    In 3rd ques of 7.1, what is the FV at end of 5 years?

    • @IFT-CFA
      @IFT-CFA  3 года назад

      FV is 1000.
      IFT Support Team

  • @AbdulQadir-gf5nv
    @AbdulQadir-gf5nv 2 года назад

    Thanks a lot for great TVM lectures

  • @staricee8700
    @staricee8700 Год назад

    Are these all quant videos ? Full quant 7modules videos ? 21 videos only?

  • @TechMaster-of8sg
    @TechMaster-of8sg 3 года назад +1

    Hi for the question on down payment, why cant we do it as,
    35700*(1+(0.08/12))^12
    And finally ANS/12

    • @IFT-CFA
      @IFT-CFA  3 года назад

      PMT or P can be calculated manually as follows:
      P = 35,700 * ((8%/12) / (1 - (1+(8%/12))^-12) = 3,105.49
      IFT Support Team

  • @thegodfather99
    @thegodfather99 2 года назад

    why when I am trying to solve Q 7.1 NO. 3 on the calculator send me to rest window ?

  • @astrickyt7673
    @astrickyt7673 10 месяцев назад

    does this channel's quant videos cover full level 1 CFA syllabus?

  • @mwandakoleonard5038
    @mwandakoleonard5038 3 года назад +1

    i need more clarification on where to assign the negative sign on either present value or future value

    • @ayeamal3143
      @ayeamal3143 3 года назад +1

      A good general rule of thumb is if you are going to deposit cash today, you would use the positive sign, and the future value must be negative. When you want to save money for example, you would use the negative sign for PV, and future value must be positive in this case. You cannot have both present and future value be negative as this will give you an error when inputting it onto the calculator.

    • @IFT-CFA
      @IFT-CFA  3 года назад

      Any cash outflow will be entered with negative sign and cash inflow is entered as positive sign.
      IFT Support Team

  • @ArifMKhan-vm8sk
    @ArifMKhan-vm8sk 4 года назад +1

    No. 3 - re the int. rate calculation for the $100 monthly coupon over 5 yrs, w/ $900 as PV & $1,000 FV, I got 14.37% using the HP12C calc. Did anyone else get the same answer?

    • @looomze
      @looomze 4 года назад

      I got 12.83 with my HP12c. However, it seems that mine rounds up the (n) calculations. @06:36 I got 19 instead of 18.85. Do you get the same?

    • @IFT-CFA
      @IFT-CFA  4 года назад

      Why are you calculating using monthly coupons? Please share with us your calculation steps.
      IFT support team

    • @craigdoyle5036
      @craigdoyle5036 3 года назад

      I have the same issue with HP 12c

    • @craigdoyle5036
      @craigdoyle5036 3 года назад

      @@looomze how did you compute to get 12.83? I have tried in both bin and end mode, yet I do not get 12.83

    • @rajeev05071991
      @rajeev05071991 3 года назад +1

      you get 14.37 if your calculator is set at begin mode

  • @the_thapa
    @the_thapa 4 года назад +1

    Really helpful and understandable 😍

    • @IFT-CFA
      @IFT-CFA  4 года назад +1

      Glad it was helpful!
      IFT support team

  • @majdsahmarany3091
    @majdsahmarany3091 3 года назад

    Hello guys, can someone help me please?
    are the 2020 books the same as the 2021?
    Or did they change them ?

  • @praveenakondyala6943
    @praveenakondyala6943 Год назад

    when I am clicking compute I/y , calculator is giving error 5

  • @Sasmyak
    @Sasmyak 3 года назад

    PLEASE! Can I clear level-1 in a 3 and a half month time period? Please respond!!!

  • @panachaiinthakul4172
    @panachaiinthakul4172 4 года назад

    @IFT why did u put negative sign for PV (-900) in Q 7.1 but positive sign for PV (+7500) in Q.72 when the question said both invest. Or it will give you the same answer by just putting opposite sign of Pv and Fv ? Thank you so much Sir

    • @IFT-CFA
      @IFT-CFA  4 года назад

      Yes, correctly said,
      IFT support team

  • @heyyywoody8627
    @heyyywoody8627 3 года назад +1

    Can anyone teach the calculation for 7.1 Question 3 in formula? Thanks

    • @IFT-CFA
      @IFT-CFA  3 года назад

      You need to calculate interest rate given the information i.e. PV, pmt, FV, and n. Simply plug in the numbers in the calculator and compute I/Y.
      IFT Support Team

  • @jotaroshinsuke
    @jotaroshinsuke 3 года назад

    Will questions such as in 7.2 appear in the actual exam, like using both methods? Or will it just be a normal MCQ using calculator?

  • @akshayseth2452
    @akshayseth2452 4 года назад +2

    Getting 100$ for next five years and in addition to that, we are receiving 1000$ then FV should be 1100$ isn't it?

    • @IFT-CFA
      @IFT-CFA  4 года назад +1

      PMT is $100 and N= 5; hence, $100 is already taken into account in payments to be received for 5 years.
      IFT support team

  • @sarthakjain789
    @sarthakjain789 3 года назад

    In the last video you said you will teach how to solve for unequal cash flows using calculator in the next video?

  • @shashankkarkera2348
    @shashankkarkera2348 4 года назад

    Example 7.3 why is this example not solved using annuity due.ie beginning annuity payment since monthly payment has to be paid at the start of each month??

    • @looomze
      @looomze 4 года назад +1

      it's due at t=1. That's why. If they said immediately or today or at t=0. You use annuity due.

    • @IFT-CFA
      @IFT-CFA  4 года назад +2

      the first payment is at t = 1, not = 0.
      IFT support team

  • @saikarthik8240
    @saikarthik8240 3 года назад +1

    in example 7.3 how did u get 0.85, plz reply

    • @IFT-CFA
      @IFT-CFA  3 года назад +1

      Since down payment is 15%, this implies loan amount will be 100% - 15% = 85% or 0.85.
      IFT Support Team

  • @lamiyahajizada6319
    @lamiyahajizada6319 4 года назад +1

    Could you say which formula you used for solving for interest rate and growth rates exercise 3

    • @IFT-CFA
      @IFT-CFA  4 года назад

      Which question are you referring to? Please provide more details.
      IFT support team

    • @lamiyahajizada7581
      @lamiyahajizada7581 4 года назад

      @@IFT-CFA You invest $900 today and receive a $100 coupon payment at the end of every year for 5 years...so on.. That one

    • @ishaanshah007
      @ishaanshah007 4 года назад

      @@lamiyahajizada7581
      This is something that will be difficult to solve manually.
      Assume r to be the interest rate.
      The FV for PV = 900 is 900*(1 + r)^5.
      The FV for payments 100 can be calculated by using formula for FV for Ordinary anuities. (note: FV will be negative because we are receiving payments. Using FV formula because it makes it easier)
      This FV = -1* 100* ((1 + r)^n - 1))/ r
      Now add both the FVs to get the real FV = 1000.
      As you can see, it will quite difficult to solve it via calculator as well.

    • @iuson1351
      @iuson1351 4 года назад

      @@ishaanshah007 So is it something that must be solved using the calculator?

    • @ishaanshah007
      @ishaanshah007 4 года назад

      @@iuson1351 yes, it can be solved easily using a financial calculator as they have shown in the video.

  • @minsvarghese
    @minsvarghese 2 года назад

    7.3 Interest has to be .08/12 rite!?
    How cum 8/12....!?